European stocks finished with solid gains Tuesday, breaking a string of losses as concerns about a potential global trade war eased and as investors turned their focus to merger news and other corporate developments.
How markets are moving
The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP -0.66% bulked up 1.2% to end at 367.57, cutting its year-to-date drop to 5.6%. On Monday, the benchmark fell 0.7% and marked a fourth straight decline, as well as a one-year low.
In Frankfurt, the DAX 30 /zigman2/quotes/210597999/delayed DX:DAX -0.70% jumped 1.6% to finish at 11,970.83, and in Paris, the CAC 40 index /zigman2/quotes/210597958/delayed FR:PX1 -1.22% tacked on 1% to 5,115.74. The FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX -0.71% rose 1.6% in London to close at 7,000.14.
The euro /zigman2/quotes/210561242/realtime/sampled EURUSD +0.2449% traded at $1.2409, down from $1.2446 late Monday in New York.
What’s driving markets
European equities followed in the footsteps of Asian stocks /zigman2/quotes/210597971/delayed JP:NIK +0.18% /zigman2/quotes/210598030/delayed HK:HSI -0.95% , which leapt after Wall Street’s big rally on Monday that left the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.88% higher by 669 points.
U.S. stocks logged their best one-day percentage gains since 2015 on Monday on reports that U.S. and China are conducting behind-the-scenes talks to avert a global trade war. American stocks also were moving higher on Tuesday.
Fears about a possible trade war have hit global equity markets this month, driven by U.S. President Donald Trump’s push for tariffs on at least $50 billion of Chinese products.
In other developments Tuesday, Erkki Liikanen, Finland’s central bank governor and a member of the European Central Bank’s governing council, told CNBC that political risks could pose a potential problem for economic recovery in the eurozone and that could prompt the ECB to extend its €1 trillion asset-purchase program that’s currently expected to wrap up in September.
What strategists are saying
Investors are “beginning to see light at the end of the tunnel after a period which threatened to see a global trade war break out,” said Joshua Mahony, market analyst at IG, in a note. “With Trump tweeting of multiple trade discussions going on behind the scenes, there is a feeling that the ultimate resolution will likely be a greater global access for U.S. firms, highlighting why we are seeing an outperformance in U.S. stocks.”
Deutsche Bank shares /zigman2/quotes/207242873/delayed XE:DBK -1.40% rose 1.1% following a report by the U.K.’s Times newspaper that the German lender is looking to replace Chief Executive John Cryan less than two years into his tenure. The bank had approached a senior executive at Goldman Sachs in its effort to find a successor to help turn around Deutsche Bank, which posted its third straight annual loss in 2017.
H&M Hennes & Mauritz AB /zigman2/quotes/208522175/delayed SE:HM.B -1.68% slumped by 5% after the Swedish retailer posted a 44% fall in first-quarter net profit, saying weak sales in the fourth quarter of 2017 and an “unusually” cold winter weather led to a stock imbalance.
Casino Guichard-Perrachon SA. /zigman2/quotes/203038848/delayed FR:CO -3.47% moved up 3.8% as the French company behind retailer Monoprix said it is struck a deal with Amazon.com Inc. /zigman2/quotes/210331248/composite AMZN -1.79% to bring grocery items from its stores to members of Amazon’s Prime Now program.
GlaxoSmithKline PLC /zigman2/quotes/200381158/delayed UK:GSK +0.32% gained 4.9% after the drugmaker agreed to pay $13 billion to Novartis AG /zigman2/quotes/203286410/delayed CH:NOVN +0.77% for its 36.5% stake in their consumer health care joint venture. Novartis shares tacked on 2.1%.
Ferguson PLC /zigman2/quotes/209006722/delayed UK:FERG -2.20% jumped 6.7% as the building materials company said it plans to pay a $1 billion special dividend, and that its revenue and profit increased in the first half of its 2018 financial year.